EL CAMINO REAL ALLIANCE INDEPENDENT AUDITOR’S REPORT FOR THE YEAR ENDED JUNE 30, 2016 Operating: EL CAMINO REAL CHARTER HIGH SCHOOL
EL CAMINO REAL ALLIANCE
INDEPENDENT AUDITOR’S REPORT
FOR THE YEAR ENDED
JUNE 30, 2016
Operating:
EL CAMINO REAL CHARTER HIGH SCHOOL
EL CAMINO REAL ALLIANCE
TABLE OF CONTENTS
JUNE 30, 2016
PAGE
INTRODUCTORY SECTION
Table of Contents i – ii
FINANCIAL SECTION
Independent Auditor’s Report 1 – 2
Management’s Discussion and Analysis 3 – 7
Statement of Financial Position 8
Statement of Activities 9
Statement of Cash Flows 10
Notes to the Financial Statements 11 – 21
SUPPLEMENTARY INFORMATION SECTION
Local Education Agency Organization Structure 23
Schedule of Average Daily Attendance 24
Schedule of Instructional Time 25
Schedule of Functional Expenses 26
Reconciliation of Annual Financial and Budget Report
With Audited Financial Statements 27
Notes to Supplementary Information 28
Schedule of Expenditures of Federal Awards 29
Notes to Schedule of Expenditures of Federal Awards 30
OTHER INDEPENDENT AUDITOR’S REPORTS
Report on Internal Control Over Financial Reporting and on Compliance
and Other Matters Based on an Audit of Financial Statements Performed
in Accordance With Government Auditing Standards 32 – 33
Report on Compliance for Each Major Program and on Internal
Control Over Compliance Required by the Uniform Guidance 34 – 35
Report on State Compliance 36 – 38
i
EL CAMINO REAL ALLIANCE
TABLE OF CONTENTS
JUNE 30, 2016
PAGE
FINDINGS AND RECOMMENDATIONS SECTION Schedule of Findings and Questioned Costs 40 – 41
Schedule of Prior Audit Findings 42
ii
Feddersen & Company, LLP Certified Public Accountants
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Report on the Financial Statements
We have audited the accompanying financial statements of El Camino Real Alliance (a nonprofit
organization), which comprise the statement of financial position as of June 30, 2016, and the related
statements of activities and cash flows for the year then ended, and the related notes to the financial
statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
28632 Roadside Drive Suite 265 Agoura Hills, California 91301
Telephone (818) 707-4111 Fax (818) 707-4110
Independent Auditor’s Report
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Page 2
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of El Camino Real Alliance as of June 30, 2016, and the changes in its net assets and its cash flows
for the year then ended in accordance with accounting principles generally accepted in the United States of
America.
Other Matters
Supplementary and Other Information
Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The
accompanying schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal
Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, is presented for purposes of additional analysis and is not a required part
of the financial statements. The Management’s Discussion and Analysis on pages 3 – 7 and the
accompanying supplementary information on pages 23 – 30, are presented for purposes of additional
analysis and are also not a required part of the financial statements. Such information is the responsibility
of management and was derived from and relates directly to the underlying accounting and other records
used to prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the
financial statements or to the financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion, the
information is fairly stated, in all material respects, in relation to the financial statements taken as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated November 28,
2016 on our consideration of El Camino Real Alliance’s internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and
other matters. The purpose of that report is to describe the scope of our testing of internal control over
financial reporting and compliance and the results of that testing, and not to provide an opinion on internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering El Camino Real Alliance’s internal control
over financial reporting and compliance.
Agoura Hills, California
November 28, 2016
2
EL CAMINO REAL ALLIANCE MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2016
The Management Discussion and Analysis section of El Camino Real Alliance’s (the Organization)
financial report presents an overall review of the Organization’s financial performance during the fiscal
year that ended on June 30, 2016. Readers should also review the notes to the financial statements to
enhance their understanding of the Organization’s financial performance.
FINANCIAL HIGHLIGHTS
Net assets increased $3,799,687 or 26.5 percent over the course of the year.
Total revenues received were $39,673,203 for the fiscal year ended June 30, 2016.
The Organization incurred $35,873,516 in expenses for the fiscal year ended June 30, 2016.
OVERVIEW OF THE FINANCIAL STATEMENTS
This annual report consists of three parts – Management’s Discussion and Analysis (this section), the basic
financial statements, and supplementary information. The financial statements also include notes that
explain some of the statements and provide more detailed data. The statements are followed by a section
of supplementary information that further explains and supports the financial statements.
FINANCIAL ANALYSIS OF THE SCHOOL
Net assets. The Organization’s net assets of $18,157,363 were greater on June 30, 2016 than they were the
prior year, increasing by $3,799,687 or 26.5 percent (See Table 1.) Table 1 provides a summary of the
Organization’s net assets for the fiscal years ended 2016 and 2015.
Table 1
El Camino Real Alliance’s Net Assets
Governmental Total Total %
Activities Change Change
Summary of Statement of Net Assets 2015 2016
Cash and cash equivalents $ 7,499,034 $ 7,481,424 $ (17,610) (0.2 %)
Certificates of deposit 5,243,447 5,195,253 (48,194) (0.9 %)
Accounts receivable 3,152,569 3,305,922 153,353 4.9 %
Prepaid expenditures and deposits 674,769 371,574 (303,195) (44.9 %)
Property and equipment, net 999,942 4,061,608 3,061,666 306.2 %
Total Assets 17,569,761 20,415,781 2,846,020 16.2 %
Current liabilities 3,212,085 2,258,418 (953,667) (29.7 %)
Total Liabilities 3,212,085 2,258,418 (953,667) (29.7 %)
Net assets – unrestricted operational 9,357,676 12,928,585 3,570,909 38.2 %
Net assets – unrestricted facilities 5,000,000 5,000,000 - - %
Net assets – temporarily restricted - 228,778 228,778 ¤ - %
Total Net Assets $14,357,676 $18,157,363 $ 3,799,687 26.5 %
3
EL CAMINO REAL ALLIANCE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2016
Net assets continued. Total assets were $20,415,781, 36.7 percent in cash in banks, 25.4 percent in
certificates of deposit, 16.2 percent in accounts receivable, 19.9 percent in property and equipment, and 1.8
percent in prepaid expenses and deposits. Total liabilities were $2,258,418. Current liabilities account for
100.0 percent of the total liabilities and consist of 35.9 percent in accounts payable, 16.9 percent in accrued
payroll and payroll liabilities, 9.5 percent in due to others, and 37.7 percent in unearned revenue. Of the
Organization’s $18,157,363 net assets, 98.7 percent were unrestricted and 1.3 were temporarily restricted.
The board of directors has designated an unrestricted amount of $5,000,000 for facilities.
Table 2
Analysis of El Camino Real Alliance’s Net Assets
Summary of Statement of Activities 2015 2016
Program revenues $ 34,115,143 $ 39,613,479
General revenues 37,779 59,724
Total Revenues 34,152,922 39,673,203
Program expenses 24,002,621 31,090,326
Management and general expenses 5,797,618 4,783,190
Total Expenses 29,800,239 35,873,516
Change in Net Assets 4,352,683 3,799,687
Net Assets, Beginning 10,004,993 14,357,676
Net Assets, Ending $ 14,357,676 $ 18,157,363
Statement of Revenues, Expenses and Changes in Net Assets. Changes in total net assets, as presented
on the Statement of Net Assets, are based on the activity presented in the Statement of Activities. The
purpose of this statement is to present the revenues earned, whether received or not, by the Organization,
and the expenses incurred, whether paid or not, by the Organization. Thus, this statement presents the
Organization’s results of operations.
4
EL CAMINO REAL ALLIANCE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2016
Governmental Activities
By the end of the fiscal year, the revenues for the Organization’s activities totaled $39,673,203. LCFF
principal apportionment was 44.2 percent of total funding, 14.3 percent from education protection account
and 17.4 percent from in-lieu of property taxes. State special education funding was 5.1 percent, mandated
cost reimbursements were 5.1 percent, lottery funds comprised 2.1 percent and all other state funding was
4.1 percent of total funding. Federal funding was 2.4 percent and the remaining 5.3 percent was from all
other local revenue sources.
Figure 1
El Camino Real Alliance’s Revenues for Fiscal Year 2016
Analysis of Revenue Sources
5
Lottery
2.1%
LCFF-Principal
Apportionment
44.2%
Education
Protection Account
14.3%
Federal Revenues
2.4%
All Other Local
Revenues
5.3%
In-Lieu of Property
Tax
17.4%
All Other State
4.1%
State Special
Education
5.1%
Mandated Cost
Reimbursements
5.1%
EL CAMINO REAL ALLIANCE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2016
The cost of all the Organization’s major activities: instruction, guidance, counseling, evaluation, school
leadership, administration, maintenance and operations was $35,873,516. Program service expenses
accounted for $31,090,326 or 86.7 percent of total expenses, while $4,783,190 or 13.3 percent were
management and general support expenses.
Figure 2
El Camino Real Alliance’s Expenses for Fiscal Year 2016
General Budgetary Highlights
Per the charter for El Camino Real Charter High School, the Los Angeles Unified School District requires
that the school shall prepare and submit to the District a provisional budget, interim biannual financial
projections, and final budgets that certify the school is able to meet its financial obligations for the
remainder of the fiscal year.
6
Professional &
Consulting &
Other Operating
Expenses
9.2%
District Oversight
0.8%
Certificated
Salaries
44.1%
Classified Salaries
10.1%
Books & Supplies
7.4%
Depreciation
1.5%
Employee
Benefits
21.2%
Operations &
Other Services &
Expenses
5.7%
EL CAMINO REAL ALLIANCE
MANAGEMENT’S DISCUSSION AND ANALYSIS
For the Year Ended June 30, 2016
Average Daily Attendance
Average Daily Attendance at the second period report for El Camino Real Charter High School decreased
by 9.19 to 3,567.03 for the fiscal year ended June 30, 2016. El Camino Real Charter High School continues
to focus on attendance and student retention in the 2016-17 school year.
Second Period Report Average Daily Attendance
Factors Bearing on the School’s Future
Although the Organization is financially stable, its financial condition is highly dependent upon the
economic condition of the State of California.
CONTACTING THE SCHOOL’S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, parents, and creditors with a general
overview of the School’s finances and to demonstrate the School’s accountability for the money it receives.
If you have questions about this report or need additional information, contact Mr. David Hussey, Executive
Director at (818) 595-7500.
7
3,260.46 3,497.66 3,515.10 3,576.22 3,567.03
2,000.00
2,200.00
2,400.00
2,600.00
2,800.00
3,000.00
3,200.00
3,400.00
3,600.00
3,800.00
4,000.00
2011-12 2012-13 2013-14 2014-15 2015-16
EL CAMINO REAL ALLIANCE
STATEMENT OF FINANCIAL POSITION
JUNE 30, 2016
ASSETS
El Camino Real
Charter High
School
CURRENT ASSETS
Cash and Cash Equivalents $ 7,481,424
Certificates of Deposit 5,195,253
Accounts Receivable 3,305,922
Prepaid Expenditures 371,574
Total Current Assets 16,354,173
PROPERTY AND EQUIPMENT, NET 4,061,608
Total Assets $ 20,415,781
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts Payable $ 809,686
Accrued Payroll and Payroll Liabilities 382,488
Due to Grantor 16,643
Due to Student Groups / Other Agencies 198,613
Unearned Revenue 850,988
Total Current Liabilities 2,258,418
Total Liabilities 2,258,418
NET ASSETS
Unrestricted
Available for Operations 12,928,585
Board Designated - Facilities 5,000,000
Temporarily Restricted 228,778
Total Net Assets 18,157,363
Total Liabilities and Net Assets $ 20,415,781
The accompanying notes are an integral part of these financial statements
8
EL CAMINO REAL ALLIANCE
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2016
UNRESTRICTED NET ASSETS El Camino Real
SUPPORT AND REVENUES
Charter High
School
LCFF Sources:
Principal Apportionment State Aid $ 17,536,951
Education Protection Account 5,673,824
In-Lieu of Property Taxes 6,890,075
Federal Revenue 970,967
Other State Revenue:
Special Education 2,043,062
Mandated Cost Reimbursements 2,042,990
Lottery Revenue 824,294
All Other 1,362,107
Local Revenue:
Food Service Sales 50,797
All Other 1,989,634
Other Revenue:
Interest Income 2,558
Unrealized Gain on Investments 57,166
Total Unrestricted Revenue 39,444,425
EXPENSES
PROGRAM EXPENSES
Educational 31,090,326
SUPPORT SERVICES
Management and General 4,783,190
Total Unrestricted Expenses 35,873,516
Increase in Unrestricted Net Assets 3,570,909
TEMPORARILY RESTRICTED NET ASSETS
Other State Revenue 228,778
Increase in Temporarily Restricted Net Assets 228,778
INCREASE IN NET ASSETS 3,799,687
NET ASSETS
Beginning of Year 14,357,676
End of Year $ 18,157,363
The accompanying notes are an integral part of these financial statements
9
EL CAMINO REAL ALLIANCE
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2016
El Camino Real
Charter High
School
CASH FLOWS FROM OPERATING ACTIVITIES:
Increase in Net Assets $ 3,799,687
Adjustments to Reconcile Changes in Net Assets
to Net Cash Provided by Operating Activities:
Depreciation 549,364
Unrealized Gain on Investments (57,166)
(Increase) Decrease in Assets:
Accounts Receivable (153,353)
Prepaid Expenditures 303,195
Increase (Decrease) in Liabilities:
Accounts Payable (580,616)
Accrued Payroll and Payroll Liabilities 277,465
Due to Grantor (717,812)
Due to Student Groups / Other Agencies 198,613
Unearned Revenue (131,317)
Net Cash Provided by Operating Activities 3,488,060
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property and Equipment (3,765,246)
Construction in Progress 154,217
Investments in Certificates of Deposit 105,359
Net Cash Used for Investing Activities (3,505,670)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net Cash Used for Financing Activities -
Net Decrease in Cash and Cash Equivalents (17,610)
Cash, Beginning of Year 7,499,034
Cash, End of Year $ 7,481,424
The accompanying notes are an integral part of these financial statements
10
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Organization and Nature of Activities – El Camino Real Alliance (the Organization) is a California
non-profit public benefit corporation and is organized to manage and operate public charter schools.
For the year ended June 30, 2016, the Organization operated one public charter school: El Camino
Real Charter High School (the School). The School serves students in grades nine through twelve
and is funded principally through State of California public education monies received through the
California Department of Education and the Los Angeles Unified School District.
The Los Angeles Unified School District (the District) is the chartering authority for the School.
California Education Code section 47604(c) states that the District shall not be liable for the debts
or obligations of the charter school. The District granted the School its first charter in May 2011.
The charter was renewed by the District for a term of five years for the period from July 1, 2016 to
June 30, 2021.
Charters may be revoked by the District for material violations of the charter, failure to meet pupil
outcomes identified in the charter, failure to meet generally accepted standards of fiscal
management, or violation of any provision of the law.
Basis of Accounting – The financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America as applicable to not-for-profit
organizations. Basis of accounting refers to when revenues and expenses are recognized in the
accounts and reported on the financial statements. The Organization uses the accrual basis of
accounting. Revenues are recognized when they are earned and expenditures are recognized in the
accounting period in which the liability is incurred.
Basis of Presentation – The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America. Net assets of the
Organization and changes therein are classified and reported as follows:
Unrestricted – All resources over which the governing board has discretionary control to
use in carrying on the general operations of the Organization.
Temporarily Restricted – These net assets are restricted by donors to be used for specific
purposes. The Organization currently has $228,778 of temporarily restricted net assets.
For additional information, see Note 6.
Permanently Restricted – These net assets are permanently restricted by donors and cannot
be used by the Organization. The Organization does not currently have any permanently
restricted net assets.
11
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition – The Organization receives Federal, State and local revenues for their
various educational programs. This assistance is generally received based on applications submitted
to and approved by various granting agencies. Amounts received from the California Department
of Education are recognized as revenue by the Organization based on the average daily attendance
of students. Unearned revenue is recorded to the extent cash received on grants exceeds qualified
expenses. Some government grants are based on reimbursable costs as defined by the grants.
Reimbursements recorded under these grants are subject to audit by the granting agency.
Management believes that no material adjustments will result from subsequent audits of costs
reflected in the accompanying financial statements. The Organization has elected to present
temporarily restricted revenue, the requirements of which are met in the year of receipt, as
unrestricted.
All contributions are considered to be available for unrestricted use unless specifically restricted
by the donor. Amounts received that are restricted to specific use or future periods are reported as
temporarily restricted.
Cash and Cash Equivalents – For purposes of the statement of cash flows, cash is defined as
cash on hand, amounts held at financial institutions, and short-term highly liquid investments that
are readily convertible to known amounts of cash. Investments with an original maturity of three
months or less are considered short-term for these purposes.
Unearned Revenue – Unearned revenue results from the School’s foreign exchange student
program recognizing the revenue in the period in which the related educational instruction is
performed. Accordingly, foreign exchange student program revenues received for the next school
year are deferred until the instruction.
Accounts Receivable – Accounts receivable primarily represent amounts due from federal, state
and local governments as of June 30, 2016 and are recorded at their net realizable value.
Management believes that all receivables are fully collectible, therefore no provisions for
uncollectible accounts were recorded.
Property and Equipment – Property and equipment are recorded at cost when purchased. Donated
property and equipment are recorded at fair value on the date of donation. Purchases and donations
greater than $5,000 are capitalized. Contributions of donated property and equipment are reported
as increases to unrestricted net assets unless the donor has stipulated that the donation has a specific
purpose. Expenditures for repairs and maintenance are charged to expense as incurred, whereas
renewals and betterments that extend the lives of property are capitalized. Depreciation is computed
on the straight-line method over the estimated useful lives of the assets. For additional information,
see Note 5.
12
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 1 – NATURE OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTINUED)
Use of Estimates – The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Accordingly, actual results could differ from
those estimates. Significant management estimates included in the financial statements are the
collectability of the receivables, the estimated useful lives of property and equipment, and the
functional allocation of expenses.
Functional Allocation of Expenses – The costs of providing various programs and other
activities have been summarized on a functional basis in the Statement of Activities. Expenses are
charged to each program based on direct expenses incurred. Any program expenses not directly
chargeable to a program are allocated among program and support services by a method that best
measures the relative degree of benefit.
Income Taxes – The Organization is exempt from federal and state income tax under 501(c)(3) of
the Internal Revenue Code and Section 23701(d) of the California Revenue and Taxation Code.
However, income from certain activities not directly related to the Organization’s tax-exempt
purpose is subject to taxation as unrelated business income. In addition, the Organization qualifies
for the charitable contribution deduction under Section 170(b)(1)(A) and has been classified as an
organization other than a private foundation under Section 509(a)(2). Accordingly, no provision
for income taxes has been reflected in these financial statements. The Organization has considered
its tax positions and believes that all of the positions taken in its federal and state exempt
organization tax returns are more likely than not to be sustained upon examination; therefore, no
accounting adjustment has been made to the financial statements and no disclosures of uncertain
income tax positions are required. The Organization’s returns are subject to examination by federal
and state taxing authorities, generally for three years and four years, respectively, after they are
filed.
NOTE 2 – CONCENTRATION OF CREDIT RISK
Cash balances held in banks are insured up to $250,000 by the Federal Deposit Insurance
Corporation (FDIC). The Organization maintains its cash in bank deposit accounts that at times
may exceed federally insured limits. The Organization has not experienced any losses in such
accounts. At June 30, 2016, deposits in excess of the FDIC limit amount to approximately
$6,350,000. Management believes the School is not exposed to any significant credit risk related
to cash.
NOTE 3 – CERTIFICATES OF DEPOSIT
The certificates bear interest ranging from 0.40 percent to 3.30 percent and have maturities of 12
months. Any penalties for early withdrawal would not have a material effect on the financial
statements. 13
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 4 – ACCOUNTS RECEIVABLE
Accounts receivable outstanding at June 30, 2016 consisted of the following:
State Government $ 3,238,772
Federal Government 26,871
Local Government 39,366
All Other Local Revenues 913
Total Accounts Receivable $ 3,305,922
NOTE 5 – PROPERTY AND EQUIPMENT
A schedule of changes in property and equipment and accumulated depreciation for the year
ended June 30, 2016, is as follows:
SUMMARY OF CHANGES IN PROPERTY AND EQUIPMENT
Beginning Ending
Balance Additions Subtractions Balance
Land $ - $ 2,019,964 $ - $ 2,019,964
Computer and Equipment 935,135 88,189 - 1,023,324
Buildings 141,467 1,517,626 - 1,659,093
Leasehold Improvements 156,235 - - 156,235
Building Improvements - 139,468 - 139,468
Construction in Progress 201,814 - 154,217 47,597
Totals $ 1,434,651 $ 3,765,247 $ 154,217 $ 5,045,681
SUMMARY OF CHANGES IN ACCUMULATED DEPRECIATION
Beginning Ending
Balance Additions Subtractions Balance
Computer and Equipment $ 265,804 $ 389,826 $ - $ 655,630
Buildings 94,433 63,828 - 158,261
Leasehold Improvements 74,472 81,763 - 156,235
Building Improvements - 13,947 - 13,947
Totals $ 434,709 $ 549,364 $ - $ 984,073
During the fiscal year ended June 30, 2016, $549,364 was charged to depreciation expense.
NOTE 6 – RESTRICTED NET ASSETS
Temporarily restricted net assets were restricted for the following purposes as of June 30, 2016:
Educator Effectiveness Funding $ 228,778
14
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 7 – EMPLOYEE BENEFIT PLANS
The risks of participating in these multi-employer plans are different from single-employer plans
in the following respects:
Assets contributed to the multi-employer plan by one employer may be used to provide
benefits to employees of other participating employers.
If a participating employer stops contributing to the plan, the unfunded obligations of the
plan may be borne by the remaining participating employers.
The required member, employer, and State contribution rates are set by the California
Legislature.
If the Organization chooses to stop participating in the multi-employer plans, it may be
required to pay those plans an amount based on the unfunded status of the plan, referred to
as a withdrawal liability.
The Organization has no plans to withdraw from these multi-employer plans.
California State Teachers’ Retirement System (CalSTRS)
Plan Name: California State Teachers’ Retirement System
Plan EIN: 94-6291617
Actuarial value of assets: $165,553
Actuarial accrued liability: $241,753
Funded status: 65-80 percent funded
The actuarial value of assets and accrued liability are expressed in millions and are valued as of
June 30, 2015, the most recent actuarial valuation date.
Plan Description
The Organization contributes to the State Teachers Retirement Plan (STRP), a cost-sharing
multiple-employer public employee retirement system defined benefit pension plan administered
by CalSTRS. The plan provides retirement and disability benefits, annual cost-of-living
adjustments, and survivor benefits to beneficiaries. Benefit provisions are established by state
statutes, as legislatively amended, within the State Teachers’ Retirement Law. CalSTRS issues a
separate comprehensive annual financial report that includes financial statements and required
supplementary information. Copies of the CalSTRS annual financial report may be obtained from
CalSTRS, 100 Waterfront Place, West Sacramento, California 95605, and is also available online
at www.calstrs.com.
15
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 7 – EMPLOYEE BENEFIT PLANS (CONTINUED)
Benefits Provided The benefits are established by contract, in accordance with the provisions of the State Teachers’
Retirement Law. Benefits are based on members’ years of service, age, final compensation, and a
benefit formula. The California Public Employees’ Pension Reform Act of 2013 (PERPA) made
significant changes to the benefit structure that primarily affect members first hired to perform
CalSTRS creditable activities on or after January 1, 2013. As a result of PERPA, the CalSTRS
Plan has two benefit structures: 1) CalSTRS 2% at 60 – Members first hired on or before December
31, 2012, to perform CalSTRS creditable activities, and 2) CalSTRS 2% at 62 – Members first
hired on or after January 1, 2013, to perform CalSTRS creditable activities. To be eligible for
service retirement, members hired prior to January 1, 2013, must be at least age 60 with a minimum
of five years of CalSTRS-credited service, while members hired after January 1, 2013, must be at
least age 62 with a minimum of five years of CalSTRS-credit service.
Contributions
The Organization is required to contribute an actuarially determined rate. The actuarial methods
and assumptions used for determining the rate are those adopted by the CalSTRS Teachers’
Retirement Board. School employer contributions will increase from 8.25 percent to a total of 19.1
percent of covered payroll over a seven-year period, effective July 1, 2014. The required employer
contribution rate for the fiscal year 2015-2016 was 10.73 percent of annual payroll. The School’s
contribution to CalSTRS for the fiscal years ended June 30, 2016, 2015 and 2014 was $1,598,786,
$1,145,994 and $1,028,236, respectively, and equals 100.0 percent of the required contributions
for the year. The Organization’s contributions are less than 5 percent of total plan contributions.
For the fiscal year 2017, the Organization is required to contribute 12.58 percent of annual payroll.
California Public Employees’ Retirement System (CalPERS)
Plan Name: California Public Employees’ Retirement System
Plan EIN: 94-6207465
Market value of assets: $56,814
Actuarial accrued liability: $73,325
Funded status: 65-80 percent funded
The market value of assets and the actuarial accrued liability are expressed in millions and are
valued as of June 30, 2015, the most recent actuarial valuation date.
Plan Description
The Organization contributes to the School Employer Pool under the CalPERS, a cost-sharing
multiple-employee retirement system defined benefit pension plan administered by CalPERS. The
plan provides retirement and disability benefits, annual cost-of-living adjustments, and death
benefits to plan members and beneficiaries. Benefit provisions are established by State statutes, as
legislatively amended, within the Public Employees’ Retirement Law. CalPERS issues a separate
comprehensive annual financial report that includes financial statements and required
supplementary information. Copies of the CalPERS’ annual financial report may be obtained from
the CalPERS Executive Office, 400 Q Street, Sacramento, CA 95811, and is also available online
at www.calpers.ca.gov. 16
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 7 – EMPLOYEE BENEFIT PLANS (CONTINUED)
Benefits Provided
The benefits for the CalPERS plan are established by contract, in accordance with the provisions
of the California Public Employees’ Retirement Law (PERL). The benefits are based on members’
years of service, age, final compensation, and benefit formula. Benefits are provided for disability,
death, and survivors of eligible members or beneficiaries. PERPA made significant changes to the
benefit structure that primarily affect members first hired to perform CalPERS creditable activities
on or after January 1, 2013. As a result of PERPA, the CalPERS Plan has two benefit structures:
1) CalPERS 2% at 55 – members first hired on or before December 31, 2012, to perform CalPERS
creditable activities, and 2) CalPERS 2% at 62 – members first hired on or after January 1, 2013,
to perform CalPERS creditable activities. To be eligible for service retirement, members hired
prior to January 1, 2013, must be at least age 50 with a minimum of five years of CalPERS-credited
service, while members hired after January 1, 2013, must be at least age 52 with a minimum of five
years of CalPERS-credited service.
Contributions Contribution rates for the CalPERS plan are determined annually on an actuarial basis as of June
30 by CalPERS. The CalPERS Plan’s actuarially determined rate is the estimated amount
necessary to finance the costs of benefits earned by employees during the year, with an additional
amount to finance any unfunded accrued liability. Classic plan members, defined as a member who
joined CalPERS prior to January 1, 2013, are required to contribute 7 percent of their salary. New
members who joined CalPERS for the first time on or after January 1, 2013 are required to
contribute 6 percent of their salary. The required employer contribution rate for the fiscal year
2015-2016 was 11.847 percent of annual payroll. The contribution requirements of the plan
members are established and may be amended by state statute. The Organization’s contributions
to CalPERS for the fiscal years ended June 30, 2016, 2015 and 2014 was $368,171, $323,686 and
$317,803, respectively, and equals 100.0 percent of the required contributions for the year. The
Organization’s contributions are less than 5 percent of total plan contributions. For the fiscal year
2017, the School is required to contribute 13.888 percent of annual payroll.
NOTE 8 – COMMITMENTS
In October 2012, the School signed a sole occupant agreement with the Los Angeles Unified School
District (the District) for use of property located at 5440 Valley Circle Blvd., Woodland Hills,
California. The agreement carries a term that coincides with the School’s charter. The agreement
does not require the School to pay a lease amount for the use of the property, but instead, the School
pays a Pro Rata Share Charge based on the square feet used. This Pro Rata Share Charge paid to
the District for the School for the year ended June 30, 2016 was $328,745.
17
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 9 – OPERATING LEASE
The School is a party to one operating lease for operational facilities to provide a “continuation
education program” for 125 to 200 students in grades nine through twelve who are at risk of not
completing their education.
Los Angeles Unified School District – The lease is co-terminus with the School’s charter petition,
commencing July 1, 2016 with the term ending June 30, 2021. The first option period to extend
the term of this lease to June 30, 2021 was exercised. The lease is payable annually in the amount
of 10.0 percent of Average Daily Attendance at the site or $72,000, whichever is greater. Rent
expense for the year ended June 30, 2016 was $128,908.
Future minimum lease payments under the lease agreement are as follow as of June 30, 2016:
Year Ending Minimum
June 30, Lease Payments
2017 $ 72,000
2018 72,000
2019 72,000
2020 72,000
2021 72,000
$ 360,000
NOTE 10 – POST-RETIREMENT BENEFITS
On June 1, 2015, the El Camino Real Alliance Public School Employee Retirement Healthcare
Benefits Trust (the Trust) was established. The trust was established to hold assets solely for the
benefit of one or more specified retirement healthcare benefit plans (the Plans) sponsored and
provided to qualified public school employees and beneficiaries of the Organization. The trust is
not established for retirement benefits other than public school employee retirement benefits under
the Plans or for retirement benefits with respect to any employee of any employer other than the
School. The Plan is a single employer plan and provides medical, dental and vision benefits to
qualified employees who retire from the School. The Plan provides for a benefit determined by a
formula based on the employees’ years of service and age at retirement. An actuarial calculation
of the estimated present value of medical, dental and vision benefits to the participants of El Camino
Real High School Post-Retirement Medical Plan was performed for the year ended June 30, 2016
that amount is approximately $51,700,000. The $51,700,000 represents the present value of all
benefits expected to be paid in the future, which includes benefits attributable to both past and
future services. The calculation did not reflect the potential impact of the Medicare Part D benefits.
Information relating to the School’s Post-Retirement Medical Plan is shown in the following table:
18
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 10 – POST-RETIREMENT BENEFITS (CONTINUED)
19
Discount rate to compute the
present value of the estimated
benefits
5.00 percent compounded annually
Health Care Cost Trend Factors –
Pre-Retirement Trend Rate
Medical premiums will increase by: 6.50 percent in the
first year, 6.70 percent for the 2nd year, 5.70 percent for the
3rd year, 5.30 percent for the 4th year, 5.20 percent for the
5th and 6th year, 5.10 percent for the 7th through 11th year,
5.40 percent for the 12th year, 6.0 percent for the 13th year,
6.20 percent for the 14th year, and slowly trends down to
4.2 percent in the year 2074. Dental and vision premiums
will increase by 5.00 percent from year 2016 through year
2064, and slowly trends down to 4.20 percent in year 2084.
Health Care Cost Trend Factors –
Post-Retirement Trend Rate
Medical premiums will increase by: 6.40 percent in the
first year, 6.10 percent in the second year, 5.80 percent in
the 3rd year, 5.20 percent in the 4th and 5th years, 5.10
percent for the 6th year through 20th year, and eventually
trends to 4.20 percent in year 2086. Dental premiums will
increase by 5.0 percent from years 2016 to 2057, and
eventually stays level at 4.20 percent in year 2088.
Effect of a one-percentage-point
increase in trend rates – APBO
(Accumulated Post Retirement
Benefit)
Trend $20.9 million, APBO trend +1 is $25.7 million and
APBO trend -1 is $17.2 million.
Trend in compensation costs Not applicable
Discount rate used to compute the
accumulated post-retirement
benefit obligation
5.00 percent compounded annually.
Funding policy and status The School will fund the plan for the fiscal year ended June
30, 2016 in the amount of $1,700,000 and by at least
$1,200,000 for each fiscal year thereafter.
Cost of providing termination
benefits recognized during the
period
The cost of providing benefits for the fiscal year ended
June 30, 2016 – Not calculated.
Components of post-retirement
expense
Service cost is $1.8 million, interest cost is $1.04 million.
Accumulated post-retirement
benefit obligation showing
separately the amount applicable to
retirees, other eligible participants,
and other active participants
Retirees – $0, Eligible –$2.1 million, and Ineligible - $18.8
million.
Fair market value of plan assets $2,413,006 at June 30, 2016.
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 10 – POST-RETIREMENT BENEFITS (CONTINUED)
The post-retirement plan exposes the School to actuarial risks, such as longevity risk, market risk,
interest rate risk, and liquidity risk.
NOTE 11 – PARTICIPATION IN JOINT POWERS AUTHORITY
The Organization participates in a joint venture under a joint powers agreement (JPA) with the
California Charter School Joint Powers Authority, doing business as charterSAFE (SAFE). The
relationship between the Organization and SAFE is such that SAFE is not considered a component
unit of the Organization for financial reporting purposes.
SAFE arranges for and provides workers’ compensation, property, and liability insurance coverage
for their members. The JPA is governed by boards consisting of a representative from each
member. The board controls the operations of the JPA, including selection of management and
approval of operating budgets, independent of any influence by the member beyond their
representation of the board. Each member pays a premium commensurate with the level of
coverage requested and shares surpluses and deficits proportionate to their participation in the JPA.
All of the member schools will have individual limits, instead of member schools “sharing limits.”
Complete separate financial statements for the JPA may be obtained from the agency.
NOTE 12 – CONTINGENCIES
The School has received federal, state and local funds for specific purposes subject to review and
audit by the grantor agencies. Although such audits could generate disallowances under terms of
the grants, management believes that any required reimbursement, would not be material.
NOTE 13 – SUBSEQUENT EVENTS
The Organization’s management has evaluated events or transactions that may occur for potential
recognition or disclosure in the financial statements from the balance sheet date through November
28, 2016, the date the financial statements were available to be issued.
The School received a Notice of Violations, which was issued by the Los Angeles Unified School
District on August 23, 2016. The School submitted its Response to the Notice of Violations on
September 23, 2016. The response, plus a Memorandum of Understanding with the District
executed on October 18, 2016, has stayed the School’s charter revocation process.
20
Return on plan assets on an after-tax
basis
It is estimated that the future return on plan assets will be
4.00 – 6.00 percent per annum.
Amount by which APBO is reduced
for the subsidy
The APBO is reduced by $240,000 if excise tax is
excluded.
Effect of subsidy in the measurement
of net periodic post-retirement benefit
cost
Service cost remains at $1.8 million and interest cost is
reduced to $1 million if excise tax is excluded.
EL CAMINO REAL ALLIANCE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2016
NOTE 13 – SUBSEQUENT EVENTS (CONTINUED)
The Board voted unanimously to exercise its right to early termination without cause under Section
12.b of the Executive Director’s employment agreement, in which case the Board is contractually
required to make specified severance payment. This decision will be effective on December 16,
2016.
The Organization’s Board has recognized and identified substantial areas of improvement for its
employees, and has taken steps to greatly enhance its oversight procedures. The School has made
changes to its Enterprise Resource Planning (“ERP”) system and the Fiscal Policies and Procedures
(“FPP”) program to facilitate and improve the proper approval of purchases and expenditures.
Some of the changes are as follows:
In May 2016, the School destroyed all credit cards except for one that is kept at the School in a
safe. However, in response to the Notice of Violations, on September 21, 2016, the School’s Board
voted to amend the FPP to unambiguously prohibit personal use of the School’s credit and charge
cards.
The School implemented an Enterprise Resource Planning (ERP) system on July 1, 2015. By
September of 2016 all employees were using the ERP system, which captures the full purchase
process. Purchase requisitions are made by employees and approved by Authorizing Personnel, as
defined in the FPP. Only after the established protocol has been followed and fulfilled will the
School’s credit card then be used to facilitate a purchase. All of the supporting documents to support
a charge are to be uploaded into the ERP.
For the 2016-17 school year the School will work with the Financial Crisis and Management
Assistance Team (“FCMAT”) to review internal controls and recommend changes, while also
providing periodic training to the staff. FCMAT has already commenced its review.
Furthermore, ECRCHS will continue to work with a back office services firm, currently EdTec, to
improve best practices and continue to provide a second pair of eyes on the financials.
21
EL CAMINO REAL ALLIANCE
SUPPLEMENTARY INFORMATION SECTION
FOR THE YEAR ENDED
JUNE 30, 2016
Operating:
EL CAMINO REAL CHARTER HIGH SCHOOL
EL CAMINO REAL ALLIANCE
LOCAL EDUCATION AGENCY ORGANIZATION STRUCTURE
JUNE 30, 2016
ORGANIZATION
El Camino Real Alliance (the Organization) was established in 2011 and is a non-profit public benefit
corporation organized to manage and operate public charter schools. For the year ended June 30, 2016, the
Organization operated one public charter school: El Camino Real Charter High School (the School). The
School began serving students in August 2011. The School’s charter was approved in May 2011 and is
sponsored by the Los Angeles Unified School District. El Camino Real Charter High School’s charter
number authorized by the state of California is 1314.
GOVERNING BOARD
MEMBER OFFICE TERM TERM EXPIRES
Jonathan Wasser Chair Three Years June 30, 2017
Donna Slamon Secretary Three Years June 30, 2016
Jackie Keene Treasurer Three Years June 30, 2017
Denny Thompson Member Three Years June 30, 2017
Odus Caldwell Member Three Years June 30, 2016
Larry Rubin Member Three Years June 30, 2017
Peter Vastenhold Member Three Years June 30, 2016
EXECUTIVE DIRECTOR / PRINCIPAL
David Fehte – Through October 26, 2016
David Hussey – As of October 27, 2016
CHIEF BUSINESS OFFICIAL
Marshall Mayotte
See auditor’s report and the notes to supplementary information
23
EL CAMINO REAL ALLIANCE
SCHEDULE OF AVERAGE DAILY ATTENDANCE
FOR THE YEAR ENDED JUNE 30, 2016
El Camino Real Charter High School:
Second Period Report Annual Report
Classroom Independent Total Classroom Independent Total
Based Study ADA Based Study ADA
Grades 9
through 12 3,492.40 74.63 3,567.03 3,453.85 77.38 3,531.23
ADA Totals 3,492.40 74.63 3,567.03 3,453.85 77.38 3,531.23
See auditor's report and the notes to supplementary information
24
EL CAMINO REAL ALLIANCE
SCHEDULE OF INSTRUCTIONAL TIME
FOR THE YEAR ENDED JUNE 30, 2016
El Camino Real Charter High
School:
Number of Days
2015-16 Minutes Traditional
Requirement Actual Calendar Status
Grade 9 64,800 65,388 179 In Compliance
Grade 10 64,800 65,388 179 In Compliance
Grade 11 64,800 65,388 179 In Compliance
Grade 12 64,800 65,388 179 In Compliance
See auditor's report and the notes to supplementary information
25
EL CAMINO REAL ALLIANCE
SCHEDULE OF FUNCTIONAL EXPENSES
FOR THE YEAR ENDED JUNE 30, 2016
El Camino Real Charter High School:
Program Support
Services Services
Management
Educational and General Total
Compensation and Related Expenses
Salaries - Certificated $
15,505,607 $
311,418 $
15,817,025
Salaries - Classified
2,982,944
645,708
3,628,652
Employee Benefits
7,283,019
310,099
7,593,118
Total Compensation and Related Expenses
25,771,570
1,267,225
27,038,795
Books and Supplies 1,997,779
655,987
2,653,766
Travel and Conferences
90,463
22,616
113,079
Dues and Memberships
243,672 -
243,672
Operations and Housekeeping Services
860,079 -
860,079
Rentals, Leases and Repairs
210,840
491,938
702,778
Communications
88,330
22,082
110,412
Professional/Consulting Services and Operating Expenditures
1,827,593
1,472,970
3,300,563
Depreciation and Amortization -
549,364
549,364
District Oversight -
301,008
301,008
Total $
31,090,326 $
4,783,190 $
35,873,516
See auditor's report and the notes to supplementary information
26
EL CAMINO REAL ALLIANCE
RECONCILIATION OF ANNUAL FINANCIAL AND BUDGET
REPORT WITH AUDITED FINANCIAL STATEMENTS
FOR THE FISCAL YEAR ENDED JUNE 30, 2016
El Camino Real
Charter High
School
June 30, 2016 Annual Financial and Budget Report Fund Balance (Net Assets) $ 17,194,987
Adjustments and Reclassifications Increase (Decrease):
Accounts Receivable / State Revenues 148,271
Property and Equipment, Net / Depreciation and Amortization (16,794)
Accounts Payable / Rentals, Leases and Repairs (56,908)
Accounts Payable / Professional/Consulting and Operating Expenses 169,124
Accrued Payroll and Payroll Liabilities / Employee Benefits 273,469
Due to Grantor Goverments / Other State Revenue 445,214
June 30, 2016 Audited Financial Statement Fund Balance (Net Assets) $ 18,157,363
See auditor's report and the notes to supplementary information
27
EL CAMINO REAL ALLIANCE
NOTES TO SUPPLEMENTARY INFORMATION
JUNE 30, 2016
NOTE 1 – PURPOSE OF SCHEDULES:
A. Local Education Agency Organization Structure
This schedule provides information about the date and granting authority for the School
that El Camino Real Alliance (the Organization) operates, members of the governing
board, and members of the administration.
B. Schedule of Average Daily Attendance
Average daily attendance is a measurement of the number of pupils attending classes of
the School operated by the Organization. The purpose of attendance accounting from a
fiscal standpoint is to provide the basis on which apportionments of state funds are made
to charter schools. This schedule provides information regarding the attendance of students
at various grade levels.
C. Schedule of Instructional Time
This schedule presents information on the amount of instructional time offered by the
School and whether the School complied with the provisions of Education Code Sections
46200 through 46208.
D. Schedule of Functional Expenses
The cost of providing various programs and other activities has been summarized on a
functional basis in the Statement of Activities. Accordingly, certain costs have been
allocated among the instructional programs and supporting services benefited. All costs
have been allocated based on their type, based on management’s estimates.
E. Reconciliation of Annual Financial and Budget Report with Audited Financial
Statements
This schedule provides the information necessary to reconcile the fund balances (net assets)
of the School as reported on the Annual Financial and Budget Report form to the audited
financial statements.
28
EL CAMINO REAL ALLIANCE
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2016
Federal Passed Total
Federal Grantor / Pass-Through Grantor / CFDA
Pass-
Through
Entity Through to Federal
Program or Cluster Title Number
Identifying
Number Subrecipients Expenditures
U.S. Department of Agriculture
Pass-Through Program from California
Department of Education:
National School Lunch Program 10.555 13523 $
- $
41,476
Total U.S. Department of Agriculture
-
41,476
U.S. Department of Education
Pass-Through Program from California
Department of Education:
Special Education - Grants to States;
Indiviudals with Disabilities Education
Act (IDEA, Part B) 84.027 13379
-
677,450
Title I Grants to Local Educational Agencies 84.010 14329
-
224,767
Advanced Placement Program (Advanced
Placement Test Fee; Advanced Placement
Incentive Program Grants) 84.330 14831
-
17,589
Improving Teacher Quality State Grants 84.367 14341
-
6,432
English Language Acquisition State Grants 84.365 14346
-
3,253
Total U.S. Department of Education
-
929,491
Total Expenditures of Federal Awards $
- $
970,967
See accompanying notes to the schedule of expenditures of federal awards
29
EL CAMINO REAL ALLIANCE
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED JUNE 30, 2016
NOTE 1 – BASIS OF PRESENTATION
The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal
award activity of El Camino Real Alliance under programs of the federal government for the year
ended June 30, 2016. The information in this Schedule is presented in accordance with the
requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Because the Schedule presents only a selected portion of the operations of El Camino Real Alliance,
it is not intended to and does not present the financial position, changes in net assets, or cash flows
of El Camino Real Alliance.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such
expenditures are recognized following the cost principles contained in the Uniform Guidance,
wherein certain types of expenditures are not allowable or are limited as to reimbursement.
NOTE 3 – INDIRECT COST RATE
El Camino Real Alliance has elected not to use the 10.0 percent de minimis indirect cost rate
allowed under the Uniform Guidance.
30
EL CAMINO REAL ALLIANCE
OTHER INDEPENDENT AUDITOR’S REPORTS
FOR THE YEAR ENDED
JUNE 30, 2016
Operating:
EL CAMINO REAL CHARTER HIGH SCHOOL
Feddersen & Company, LLP Certified Public Accountants
INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT
AUDITING STANDARDS
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of El Camino Real Alliance
(a nonprofit organization), which comprise the statement of financial position as of June 30, 2016, and the
related statements of activities and cash flows for the year then ended, and the related notes to the financial
statements, and have issued our report thereon dated November 28, 2016.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered El Camino Real Alliance’s
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of El Camino Real Alliance’s internal
control. Accordingly, we do not express an opinion on the effectiveness of El Camino Real Alliance’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct,
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in
internal control, such that there is a reasonable possibility that a material misstatement of the entity’s
financial statements will not be prevented, or detected and corrected on a timely basis. A significant
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
32
28632 Roadside Drive Suite 265 Agoura Hills, California 91301 Telephone (818) 707-4111 Fax (818) 707-4110
Report on Internal Control
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether El Camino Real Alliance’s financial statements
are free from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and material
effect on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the organization’s
internal control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the organization’s internal control and compliance.
Accordingly, this communication is not suitable for any other purpose.
Agoura Hills, California
November 28, 2016
33
Feddersen & Company, LLP Certified Public Accountants
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM
AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM
GUIDANCE
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Report on Compliance for Each Major Federal Program
We have audited El Camino Real Alliance's compliance with the types of compliance requirements
described in the OMB Compliance Supplement that could have a direct and material effect on each of El
Camino Real Alliance’s major federal programs for the year ended June 30, 2016. El Camino Real
Alliance’s major federal programs are identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions
of its federal awards applicable to its federal programs.
Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of El Camino Real Alliance’s major
federal programs based on our audit of the types of compliance requirements referred to above. We
conducted our audit of compliance in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of
Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require
that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the
types of compliance requirements referred to above that could have a direct and material effect on a major
federal program occurred. An audit includes examining, on a test basis, evidence about El Camino Real
Alliance’s compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal
program. However, our audit does not provide a legal determination of El Camino Real Alliance’s
compliance.
Opinion on Each Major Federal Program
In our opinion, El Camino Real Alliance complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major federal
programs for the year ended June 30, 2016.
34
28632 Roadside Drive Suite 265 Agoura Hills, California 91301 Telephone (818) 707-4111 Fax (818) 707-4110
Report on Compliance
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Page 2
Report on Internal Control over Compliance
Management of El Camino Real Alliance is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning and
performing our audit of compliance, we considered El Camino Real Alliance’s internal control over
compliance with the types of requirements that could have a direct and material effect on each major federal
program to determine the auditing procedures that are appropriate in the circumstances for the purpose of
expressing an opinion on compliance for each major federal program and to test and report on internal
control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing
an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an
opinion on the effectiveness of El Camino Real Alliance’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
federal program on a timely basis. A material weakness in internal control over compliance is a deficiency,
or combination of deficiencies, in internal control over compliance, such that there is a reasonable
possibility that material noncompliance with a type of compliance requirement of a federal program will
not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control
over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with
a type of compliance requirement of a federal program that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing
of internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance. Accordingly, this report is not suitable for any other purpose.
Agoura Hills, California
November 28, 2016
35
Feddersen & Company, LLP Certified Public Accountants
INDEPENDENT AUDITOR’S REPORT ON STATE COMPLIANCE
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Report on State Compliance
We have audited El Camino Real Alliance’s compliance with the types of state compliance requirements
described in the 2015-2016 Guide for Annual Audits of K-12 Local Education Agencies and State
Compliance Reporting, published by the Education Audit Appeals Panel, for the year ended June 30, 2016.
The applicable state compliance requirements are identified in the table below.
Management’s Responsibility
Compliance with the requirements referred to above is the responsibility of El Camino Real Alliance’s
management.
Auditor’s Responsibility
Our responsibility is to express an opinion on El Camino Real Alliance’s compliance with the state laws
and regulations based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and the 2015-2016 Guide for Annual
Audits of K-12 Local Education Agencies and State Compliance Reporting, published by the Education
Audit Appeals Panel. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the types of compliance requirements referred to above that
could have a direct and material effect on a state program occurred. An audit includes examining, on a test
basis, evidence about El Camino Real Alliance’s compliance with those requirements and performing such
other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion on compliance for each state program. Our audit does not provide a legal
determination of El Camino Real Alliance’s compliance with those requirements.
Compliance Requirements Tested
In connection with the audit referred to above, we selected and tested transactions and records to determine
El Camino Real Alliance’s compliance with the state laws and regulations applicable to the following items:
Procedures
Compliance Requirements Performed
Local Education Agencies Other Than Charter Schools:
Attendance Not applicable
Teacher Certification and Misassignments Not applicable
Kindergarten Continuance Not applicable
Independent Study Not applicable
Continuation Education Not applicable
Instructional Time Not applicable
36
28632 Roadside Drive Suite 265 Agoura Hills, California 91301 Telephone (818) 707-4111 Fax (818) 707-4110
Report on State Compliance
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Page 2
Procedures
Compliance Requirements Performed
Instructional Materials Not applicable
Ratio of Administrative Employees to Teachers Not applicable
Classroom Teacher Salaries Not applicable
Early Retirement Incentive Not applicable
Gann Limit Calculation Not applicable
School Accountability Report Card Not applicable
Juvenile Court Schools Not applicable
Middle or Early College High Schools Not applicable
K-3 Grade Span Adjustment Not applicable
Transportation Maintenance of Effort Not applicable
School Districts, County Offices of Education, and Charter Schools:
Educator Effectiveness Yes
California Clean Energy Jobs Act No, see below
After School Education and Safety Program No, see below
Proper Expenditure of Education Protection Account Funds Yes
Unduplicated Local Control Funding Formula Pupil Counts Yes
Local Control and Accountability Plan Yes
Independent Study-Course Based No, see below
Immunizations Yes
Charter Schools:
Attendance Yes
Mode of Instruction Yes
Nonclassroom-Based Instruction/Independent Study for Charter Schools Yes
Determination of Funding for Nonclassroom-Based Instruction No, see below
Annual Instructional Minutes – Classroom Based Yes
Charter School Facility Grant Program No, see below
Under Local Education Agencies Other Than Charter Schools, the term “Not applicable” is used above to
mean that the program does not apply to charter schools.
We did not perform any procedures related to the California Clean Energy Jobs Act because El Camino
Real Alliance does not have expenditures for this program.
We did not perform any procedures related to the After School Education and Safety Program because El
Camino Real Alliance does not receive state funding for this program.
We did not perform any procedures related to the Independent Study-Course Based Program because El
Camino Real Alliance does not receive state funding for this program.
We did not perform any procedures related to Determination of Funding for Nonclassroom-Based
Instruction because El Camino Real Alliance did not generate more than 20.0 percent of their average daily
attendance through nonclassroom-based instruction.
37
Report on State Compliance
To the Board of Directors of
El Camino Real Alliance
Woodland Hills, California
Page 3
We did not perform any procedures related to Charter School Facility Grant Program because El Camino
Real Alliance does not receive state funding for this program.
Opinion
In our opinion, El Camino Real Alliance complied, in all material respects, with the types of compliance
requirements referred to above for the year ended June 30, 2016.
Agoura Hills, California
November 28, 2016
38
EL CAMINO REAL ALLIANCE
FINDINGS AND RECOMMENDATIONS SECTION
FOR THE YEAR ENDED
JUNE 30, 2016
Operating:
EL CAMINO REAL CHARTER HIGH SCHOOL
EL CAMINO REAL ALLIANCE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
JUNE 30, 2016
Section I – Summary of Auditor’s Results
Financial Statements
Type of auditor’s report issued: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? No
Significant deficiencies identified? None reported
Noncompliance material to financial statements noted? No
Federal Awards
Internal control over major programs:
Material weakness(es) identified? No
Significant deficiencies identified? None Reported
Type of auditor’s report issued on compliance for major programs: Unmodified
Any audit findings disclosed that are required to be reported in
accordance 2 CFR section 200.516(a)? No
Major programs:
CFDA Number Name of Federal Program
84.010 Title I Grants to Local Educational Agencies
Dollar threshold used to distinguish between type A
and type B programs: $750,000
Auditee qualified as low-risk auditee? Yes
State Awards
Type of auditor’s report issued on compliance for state programs: Unmodified
Internal control over state programs:
Material weakness(es) identified? No
Significant deficiencies identified? None reported
Noncompliance material to financial statements noted? No
40
EL CAMINO REAL ALLIANCE
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
JUNE 30, 2016
Section II – Financial Statement Findings
This section identifies the significant deficiencies, material weaknesses, and instances of
noncompliance related to the financial statements that are required to be reported in
accordance with Government Auditing Standards. All audit findings must be identified as
one or more of the following categories:
Five
Digit Code Finding Types
10000 Attendance
20000 Inventory of Equipment
30000 Internal Control
40000 State Compliance
42000 Charter School Facilities Programs
50000 Federal Compliance
60000 Miscellaneous
61000 Classroom Teacher Salaries
62000 Local Control Accountability Plan
70000 Instructional Materials
71000 Teacher Misassignments
72000 School Accountability Report Card
There were no findings and questioned costs related to the basic financial statements, federal or
state awards for the year ended June 30, 2016.
41
EL CAMINO REAL ALLIANCE
SCHEDULE OF PRIOR AUDIT FINDINGS
JUNE 30, 2016
Finding Code Recommendation Current Status
2015-01: Credit Card Charges 30000
This finding was a significant School management needs to better Implemented
deficiency stating that while the
monitor the usage of each credit
card
School had formal written internal
and should modify the written
policy See Notes to Financial
control policies in place to ensure to ensure that all expenses incurred are Statements, Note 13, for
that all expenses incurred are School related, appropriate, and additional information.
School related, appropriate, and properly documented.
properly documented, they
weren't always being adhered to
by all employees.
2015-02: Expense Reimbursement 30000
This finding was a significant School management needs to better Implemented
deficiency stating that while the monitor the reimbursement of expenses
School had formal written internal
and should modify the written
policy See Notes to Financial
control policies in place to ensure to ensure that all expenses incurred are Statements, Note 13, for
that all expenses incurred are School related, appropriate, and additional information.
School related, appropriate, and properly documented.
properly documented, they
weren't always being adhered to
by all employees.
42